BrasilAgro, SLC Agricola stage land retreats

Two of Brazil's biggest farm operators staged retreat from the farmland market, with BrasilAgro selling off another part of a cane farm, for a healthy profit, while SLC Agricola ditched expansion plans.

BrasilAgro, which controls 285,000 hectares of land in the centre and east of the country, said that it had sold off a further parcel of its Araucária farm for R$41.3m.

The price for the 1,164-hectare plot equates to R$35,480 per hectare – compared with a purchase price of R$7,100 in 2007.

Factoring in the fact that only 913 hectares of the lot is suitable for cropping, with Brazilian regulations mandating environmental land breaks, the price is more than R$45,000 per hectare, equivalent to $20,300 per hectare, or $8,200 per acre.

In May last year, BrasilAgro sold a 394-hectare plot at Araucária, in the central Brazilian state of Goias, to a neighbouring farmer for the equivalent of R$37,740 per tillable hectare.

'Capital gains'

The deal "is in line with the company's business strategy that focuses not only on agricultural production but also on capital gains through the sale of properties", BrasilAgro.

Indeed, the sale has crystalised a large capital gain, with the sold plot in its books at $10.7m, the equivalent of R$11,700 per cropping hectare, a figure which includes the purchase price plus investment in the land since, minus an allowance for depreciation.

However, it comes amid some signs of the retreat in crop prices over the past two months undermining the land market.

Separately on Tuesday, SLC Agricola, Brazil's largest listed cotton and soybean grower, said it was ditching plans to double its portfolio to 700,000 hectares by 2020.

"We want to grow more selectively from now on," the group's chief executive, Aurelio Pavinato, told Bloomberg.

"While demand for grain will remain strong, it won't rise as quickly as in previous years.

"That's causing us to worry more about efficiency," he said, saying the group would focus on controlling costs to maximise profitability.

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